This module allows you to analyze existing cross correlation between Alcoa Corporation and CVS Health Corporation. You can compare the effects of market volatilities on Alcoa and CVS Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alcoa with a short position of CVS Health. See also your portfolio center. Please also check ongoing floating volatility patterns of Alcoa and CVS Health.

Pair Volatility

Allowing for the 30-days total investment horizon, Alcoa Corporation is expected to generate 1.11 times more return on investment than CVS Health. However, Alcoa is 1.11 times more volatile than CVS Health Corporation. It trades about -0.19 of its potential returns per unit of risk. CVS Health Corporation is currently generating about -0.35 per unit of risk. If you would invest 5,249 in Alcoa Corporation on January 23, 2018 and sell it today you would lose (494.00) from holding Alcoa Corporation or give up 9.41% of portfolio value over 30 days.

Correlation Coefficient

Pair Corralation between Alcoa and CVS Health

0.96

Parameters

Diversification

Almost no diversification

Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp. and CVS Health Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Alcoa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alcoa Corporation are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Alcoa i.e. Alcoa and CVS Health go up and down completely randomly.